Monday, August 10, 2009

US Unemployment Drops to 9.4 Percent

The unemployment number dropped from 9.5% (Berman Post: US Unemployment Rises to 9.5 Percent: "US Unemployment Rises to 9.5 Percent") to 9.4%, a drop of .1%.

The unemployment rate is still higher then what the Obama administration said we would have if we never passed the stimulus.



Here’s how the actual data compares to the projections by Obama’s team:*



There is hidden bad economic news in the numbers. A substantial number of people lost their jobs. The reason the unemployment number went down is because a lot of people have given up looking for a job. That takes them off the official unemployment number.


Seems a little odd, since we actually lost 155,000 jobs in July (and we lost 247,000 jobs on non-farm payrolls). The only way we can lose jobs and still have the unemployment rate go down is if the labor pool goes down even faster. And in fact that’s what it did, dropping by 422,000 workers. But the “Want a Job” category only increased by about 100K, so where did the other 300K workers go?


As you can see from the chart, both the unemployed and “want to work” categories dropped, and we know that the employed dropped as well. Something’s not right here, unless 300,000 people simply gave up entirely and decided to become bloggers or something.


Here are some numbers for you;

"In June, the Bureau of Labor Statistics said the civilian labor force was 154,926,000 people.

In July, 796,000 of those were taken out of their definition of the workforce, and thus their unemployment calculations for this month, because they have stopped looking for work "because they believe no jobs are available for them." Ten percent of the June workforce would be 15.4 million, 1 percent would be 1.5 million, and so 796,000 is roughly one half of one percent.

In other words, BLS took .5 percent of what you and I would consider unemployed and took them out of their total. And with that, unemployment went down one tenth of one percent.

Of course, if you take the July number of unemployed, 14.5 million, and add that 796,000 of discouraged workers, you get a total of 15,296,000.

In a work force of July’s number of 154,504,000, that’s an unemployment rate of 9.9 percent.

In a work for of June’s number of 154,926,000, that’s an unemployment rate of 9.8 percent.

Slublog shows the way Reuters reports on economic news changes depending on the political party in officer and sums it up as follows;

"The Reuters Unemployment News Formula:
Low unemployment + Republican President = Hidden bad economic news.
High unemployment + Democrat President = Economic recovery.

1 comment:

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